Tales from the saleroom
Steve Woolnough reports on stories and items from inside the auction houses
Our writer looks at the scheme for auction houses that guarantees standards and safeguards your monies. A great idea, except very few have signed up.
In an earlier piece for The
Armourer, I referred to The Society of Fine Art Auctioneers and Valuers (SOFAA). According to its website, the Society was formed in 1973 to provide a professional body for specialist fine art auctioneers and valuers in the UK, and remains the only organisation solely representing such businesses.
Its mission statements says that SOFAA seeks to promote and encourage the highest standards of probity and ethics within the profession and to improve knowledge, with its members supporting the principles of service to all clients and transparency in all activities. The Society also states that it: ‘Aims to provide guidance to its members to ensure the highest possible standards of practice in all regards, and encouragement and reassurance to clients that their best interests will be served at all times.’
In support of these statements, SOFAA publishes Guidance
Notes for Good Practice which its members are encouraged to comply with. These cover various topics from the conduct of auction houses’ employees to their responsibilities to both vendors and purchasers. The Notes appear to be well-balanced and sensible, and are openly available on SOFAA’s website for anyone to view, whether they are Society members or not. As SOFAA states, adhering to the Guidance: ‘Will provide reassurance to prospective buyers and sellers that proper standards are being observed.’
All this sounds very encouraging, until it is appreciated just how few auction houses are members of SOFAA. Of the 335 UK-based businesses shown on The Saleroom (many of which have specifically designated Fine Art sales), only 54 are listed as members, which equates to just 16%. Whether this is due to a general lack of awareness from the auction-using public or a failure of SOFAA to promote itself is debateable but for an organisation that has existed for near to 50 years with its aims of improving both the service to clients and the reputation of the sector, this lack of support does seem, at best, rather disappointing.
The effects of Covid-19 on all aspects of business over recent months has been massive and it may be that some auction houses may not survive the economic consequences of the pandemic. By the nature of their business, auction houses hold significant sums of money on behalf of their clients, both vendors’ proceeds of sale and buyers’ funds who are awaiting despatch of their purchases. Given that auctioneers regularly state in their T&Cs that they act as agents, I assumed such monies would be isolated in separate clients accounts, as occurs with solicitors. However, this often does not appear to be the case. When Wright Marshall went into administration in
2019, vendors assumed that the auctioneer, acting as an agent, would have ensured that their money was protected in a separate account. In fact, this did not happen. Although the auctioneer acted as agent in the sale, it collected the monies as principal, meaning that the sale proceeds were not isolated and vendors had to apply for reimbursement as unsecured creditors, resulting in a loss of some 95% of the debt. With regard to buyers, it might be felt that separating funds would not be an issue as the item purchased will remain available to them. Unfortunately, when a business collapses, movable items have a tendency to disappear, so again there could be a situation where a buyer is placed in the position of being an unsecured creditor. SOFAA’s Guidance Notes state: ‘It is required that Members make appropriate arrangements for protecting client’s monies, which in most cases will mean the maintenance of Clients Accounts.’
In these uncertain times, it is more important than ever to undertake due diligence when considering which auction houses to do business with, and therefore comparing and contrasting SOFAA’s Guidance Notes against an auction house’s T&Cs may prove useful.